QatarEnergy is expected to finalize contracts with the shipowners who will operate these vessels by the year’s end.

South Korea’s top three shipbuilders, HD Hyundai Heavy Industries, Hanwha Ocean, and Samsung Heavy Industries, collectively referred to as the “Big 3,” are on the verge of commencing substantial negotiations this month for a multi-billion dollar order from QatarEnergy for Liquified Natural Gas (LNG) vessels, according to reports.

The deal, valued at 14 trillion won (approx. US$10.7 billion), is set to engage the industry giants in negotiations aimed at procuring LNG vessels for QatarEnergy, according to inside sources and international media reports.

QatarEnergy had previously engaged the Big 3 in the initial phase of the project in 2020, during which 54 vessels were ordered – 17 from HD Hyundai Heavy Industries, 19 from Hanwha Ocean, and 18 from Samsung Heavy Industries. In the forthcoming round of negotiations, a total of around 40 vessels are expected to be on order, a slight reduction from the initial contract.

In a notable development, despite the reduction in the number of vessels to be ordered, the profitability of the deal is set to increase owing to a surge in LNG vessel prices. During the first phase of procurement in 2020, each LNG vessel was valued at around US$215 million. The current market projections indicate that each vessel in this phase is likely to exceed US$230 million.

Predictions from industry insiders suggest that if the order from QatarEnergy includes 170,000 m³ LNG vessels, the price per vessel could soar to an astonishing US$260 million, bringing the total value of the second order close to US$10 billion.

QatarEnergy is expected to finalise contracts with the shipowners who will operate these vessels by the year’s end.

The negotiations hold significant implications for the Big 3’s annual targets.

HD Hyundai Heavy Industries has already achieved 72.6% of its annual goal of US$15.74 billion, having won orders for 93 vessels amounting to US$11.42 billion this year. In contrast, Samsung Heavy Industries and Hanwha Ocean have a steeper road ahead. 

Samsung has secured orders for seven vessels, amounting to US$2.7 billion, representing 28% of their annual target of US$9.5 billion. Hanwha Ocean has only managed to achieve about 15.2% of its US$6.98 billion target with orders for five vessels, totalling US$1.06 billion.